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Last November the Auditing Practices Board (APB) approved a suite of new standards. Members of the Institute of Chartered Accountants in Ireland are obligated to use APB standards when performing an audit. The new standards - International Standards on Auditing (UK and Ireland) (ISA+) - are applicable now. They are included on Chariot 05 which can be accessed in the Members’ area of the ICAI website. Niall Walsh sets out his view of the changes and how they will impact on practitioners. [Note an extensive table summarising has been omitted from the online version of this article].

-Have you implemented ISA+ in your practice? -Do you know how these standards impact your audit teams? -Do you know when they are applicable? -Do you know when you should stop using the old Statements of Auditing Standards? -Why do you need to change?

APPLICABLE DATE ICAI members signing audit opinions are required to apply ISA+ for all engagements commencing on or after 15 December 2004.

Yes 2004!

This is not a bad as it appears at first read since, for the most part, the new standards will apply to audits with years ending on or after 15 December 2005.

The timetable appears reasonable and you may think that you now have till the end of the year to implement ISA+ but that is not necessarily so! If you have an audit period of less than 12 months you may have difficulty.

Example: A company was established on 16 December 2004. This company is a subsidiary of a company with a March year end. The new company was established for the purpose of group structuring - and has a material element of the group's business passing through its accounts for the last 3 months of the financial year. The audit report for the group will be issued under the old SASs but the audit of the subsidiary will be under the new standards.

THE DIFFERENCE So you have to apply the new standards - surely they can’t be that difficult? Did we not have standards of the highest quality previously? Yes we did but what has happened is that we have taken the International Standards on Auditing (ISA) and added a series of sections that were in the SASs but not in the ISAs. Adding these sections put the “+” in “ISA+”. -The SASs had 163 Standard Statements. -The ISAs have 336 “bold” letter paragraphs 4The ISA+ have 401 “bold” letter paragraphs This is a significant expansion of key elements of the auditing standards!

SCOPE The new standards include not just what was in the SASs but also have more detailed procedures covering many topics including -Risk Assessment -Fraud -Planning -Understanding the Entity and -Communication. As a matter of interest if you historically had complied with the ISAs issued by the IAASB and the SASs you may think you have addressed every thing you need to address. Not so! IAASB issued the following revised revised standards applicable for periods commencing on or after 15 December 2004 : -ISA 240 The Auditors' Responsibility to consider audit fraud in an audit of financial statements -ISA 300 Planning an audit of financial statements -ISA 315 Understanding the entity and its environment and assessing the risk of material misstatement -ISA 500 Audit Evidence If you applied the ISAs historically have you changed your approach to take account of the changes under these new ISAs - let alone the ISA+s? There are a number of key areas where changes exist which you should focus on. They are: -ISA+ 240 The Auditor’s Responsibility to consider audit fraud in an audit of financial statements -ISA+300 Planning an audit of financial statements -ISA+315 Understanding the entity and its environment and assessing the risk of material misstatement

ITEMS TO CONSIDER Table 1 shows a sample of items extracted from the ISA+s that you should consider. How will they increase the work load on your engagement? How will they impact your engagement economics?

CONCLUSION The ISA+s are more significant than most people think. You may think that the standards are simply the standards the IAASB issued some years ago with the addition of some paragraphs that existed in the UK & Irish SASs. Not really! If you are an auditor you need to under stand the ISA+s and you need to get up to speed to ensure that they are addressed in your engagements! Time is short. Niall Walsh, FCA, is a Partner in Deloitte with responsibility for Professional issues.